The Short Answer
1. Fund flexibility is a means to the ends of better results for children, adults, families and communities. It is not an end in itself.
2. Create individual child case level flexibility through wrap around: Take all the money that is being spent on a child by the various service systems. Allow the service team to buy any plan of service for the child with the combined funding, provided that the total expenditure does not exceed some percentage of the original total.
3. Combine discretionary money into a funding pool: This is the most common kind of funding pool and the least useful. The small advantages that can be gained are the ability to fund joint projects and align the use of money for maximum impact.
4. Negotiate a core dollar deal: A more powerful form of fund pool involves the pooling of core dollars, such as base funding for child welfare, juvenile justice, mental health or education. The principal reason to combine core dollars into a funding pool is to allow the combination of prevention and remediation funding. This brings with it a natural incentive to save on remediation so that savings can be captured and reinvested in prevention. Such deals can be structured around the answers to six questions: Who is accountable? For what results? With what money? With what standards and safeguards? With what risks, rewards, and penalties? For what period of time?
5. Consider creating a “unified budget,” as a special variation of core dollar deals. No funds are physically combined. Each agency retains full control of the funds in question. But an oversight body of some sort creates and manages a unified budget which displays the full range of funding from prevention, early intervention to deep end expenditures. By considering this range of expenditures AS A WHOLE, the oversight group can begin to make the connections between expenditures that allow investments in prevention to be tracked, and savings in remediation to be captured, retained and reinvested.
(1) “If only we had a funding pool, all would be right with the world.” There is widespread lack of understanding of how fund flexibility can and does work. The value of fund flexibility structures, including fund pools, are all dependent on the details of construction. There are a few simple things to keep in mind:
(2) Here are four things you can do or rather four things that can be done. The actual doing of any of these depends on the cooperation of many players, any one of which can block the work.
|1. Who’s accountable?
2. For what results?
3. With what money?
4. With what standards and safeguards?
5. With what risks rewards and penalties?
6. For what period of time?
Such deals have been successfully created in Iowa, Vermont and Maryland. The creation of fund flexibility deals is discussed in more detail in “Trading Outcome Accountability for Fund Flexibility,” which can be read on the FPSI website.
|Consider creating a “unified budget,” as a special variation of core dollar deals. This is an important alternative to the concept of a fund pool. No funds are physically combined. Each agency retains full control of the funds in question. But an oversight body of some sort creates and MANAGES a unified budget which displays the full range of funding from prevention, early intervention to deep end expenditures. For example, in juvenile justice, the range might go from neighborhood recreation services to mentoring programs to diversion programs to non-secure detention to secure detention to adult detention. In the combined out of home care system (child welfare, juvenile justice, mental health and education) the range of funding might go from respite care and family support services to family preservation to family foster care to group and institutional care. By considering this range of expenditures AS A WHOLE, the oversight group can begin to make the connections between expenditures that allow investments in prevention to be tracked, and savings in remediation to be captured, retained and reinvested. This is the concept behind the Iowa Decategorization program, one of the country’s oldest successful fund flexibility programs.|
(3) One powerful way of thinking about the notion of fund flexibility is the “Front Room Back Room” view of the service system. In the front room, people get what they need, based on what they need, not all the crazy categories we have created over the last 50 years. In the back room we categorize the hell out of them so we can claim every conceivable dollar to pay for what’s in the front room. The challenge for fiscal folks is to rearrange the back room so that the front room is possible.